Co-operative hopes rebates will attract customers

The country's smallest bank, the Cooperative Bank, wants to double its business within five years.

At present the bank has 128,000 customers and reported a net profit for the year ending March of $5.8 million, up 1.7% on the previous year.

Co-operative received its banking licence in October 2011 and has for the first time given its customers, who are also its owners, a rebate worth $1 million in total.

Chief executive Bruce McLachlan says it aims to offer more, and larger, rebates in the future which he hopes will attract more customers and more business.

"The single biggest issue for the Co-operative Bank is many New Zealanders don't know we exist," he said.

"We know we've got to work on the awareness of New Zealanders and I'd just say watch this space over the next few weeks."

Mr McLachlan says the bank has a point of difference in that it returns excess profits to customers.

He says the Co-operative Bank is also hoping to expand its branch network, starting with one new office in Christchurch and two in Auckland in September.

Meanwhile, Cooperative Bank believes it will be little affected by new capital adequacy requirement ratios, which require banks to have bigger cash buffers, because its loan book is almost completely funded by deposits.

The bank's riskier loans, those to customers with less than 20% deposit, increased from 11.5% last year to a peak of 22% in November.

Mr McLachlan says the jump was largely due to a reclassification of what was a risky loan. He says such loans now make up 18.5% of the loan book and the bank is working hard to reduce that further.